All-cash homebuyers in Northern Nevada hit record high – Las Vegas Review-Journal

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Washoe County broke an all-time record in October for the most all-cash home sales, setting the stage for an area becoming more expensive by the day.

Home prices and high-paying jobs have been on the rise in Washoe County, largely the cities of Reno and Sparks, as major companies continue to set up shop and rapidly grow in the area.

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Nearly 30 percent of Washoe County’s home sales in October were all-cash (no mortgage needed), a record-breaking high dating back more than a decade, which is how long the county assessor’s office has been collecting the data. And while Lake Tahoe is known for multimillion-dollar real estate, houses on the Nevada side of the city make up a small fraction of the residences in Washoe County.

Brian Bonnenfant, project manager for the Center for Regional Studies at the University of Reno, Nevada said Northern Nevada’s real estate scene has been seeing an influx of high-income earners along with high-income jobs for years.

Companies such as Tesla, Google and Panasonic have all set up shop in Northern Nevada alongside the region’s lithium-ion battery company boom. The Tahoe Reno Industrial Center, billed as the largest industrial park in the world, houses a Tesla gigafactory which opened in 2016 and employs an estimated 11,000 workers. Tesla also announced at the start of 2023 it plans on hiring 3,000 more workers and building two new factories as part of the Sparks facility.

Home sales, and home prices, said Bonnenfant, have invariably gone up with the boom in business.

“The luxury side of product has still been very healthy (in Washoe County),” Bonnenfant said in regards to massive companies like Tesla and Google bringing corresponding high-wage tech salaries. “A lot of million-dollar-plus homes, existing and new are being built and sold, it’s easily the most popular product in town.”

Washoe County is located along the northwestern edge of Nevada, and is the second largest county in the state by population with close to a half-million residents.

Bonnenfant said much like Southern Nevada, high-income earners from California are seeking out a cheaper life in Washoe County. Their companies are moving here and bringing them with them. The biggest demographic age range moving to the area is 20-29 year olds.

“Through November, one out of every four existing homes were cash purchases,” he said. “This indicates that the California relocation of homeowners is alive and well, or investors still see our region as a safe investment, albeit at relatively high prices, or both.”

He said with high mortgage rates (just under 7 percent for a 30-year-fixed rate right now), someone would need to make at least $125,000 annually to afford a mortgage for the median home sale price in Washoe County, which currently sits at around $560,000.

Las Vegas Realtors says the median price for a resale home in Southern Nevada in December was $449,900.

“And that’s out of reach for most households now, unless of course you are a Californian, and sell your house in California for say more than (the average home price) and then bring that money over here. And that’s made up the bulk of the activity this year, what’s been driving a lot of it is those cash sales.”

Sarah Scattini, a real estate agent who has been working in Northern Neveda for 20 years, said she really noticed real estate begin to take off in 2019, with a new influx of high-income earners.

Scattini, vice president of the Nevada Realtors State Association, said major companies such as Tesla and Google are helping their employees relocate to the southern part of the state.

“They’re also giving them incentive packages to entice them to move here and come make the jump here,” she said. “So they are paying for their rent for a period of time while they come look for homes to buy in the area.”

California boomin’

Close to a third of the people who are relocating to Washoe County are from California and it has been that way for decades, according to Washoe County data.

Bonnenfant said that back in 2015 the county was selling approximately 30 homes a quarter that were valued at more than $1 million and since the pandemic that number has jumped to 143. The Reno area has also added close to 10,000 more jobs through November of last year, compared to the same time period in 2022.

Much like in Clark County and the rest of the U.S., spiking mortgage rates “kneecapped” the Washoe County market, Bonnenfant added.

Washoe County also takes into account the ultra-affluent Lake Tahoe area where the average sale price for a home is approximately $1.6 million, according to the Northern Nevada Regional Multiple Listing Service.

This has in turn sparked an affordability crisis and subsequent spike in homelessness in the region that Reno Mayor Hillary Schieve has addressed as a key priority. In an email response to the Las Vegas Review-Journal, Schieve said Reno is making a big effort to provide more affordable housing.

“From new home construction, to new apartments and rehabilitating existing structures, Reno is working to add housing in a variety of neighborhoods.”

Schieve said Reno has spent $11.7 million in rental assistance in the last three years, supporting 3,661 households, and from 2022 to the end of last year, 2,600 apartments and single-family dwelling units were created. This included the city council approving federal funding that helped build 1,134 affordable housing units and 134 rehabilitation units.

Council also allocated $7.5 million from American Rescue Plan funds to help build a rehabilitation facility for low-income residents with mental health needs, as well as units other low-income residents or homeless veterans.

Many local citizens have decried the increase in home prices, and invariably, the rental rates. RentCafe has the average rental rate for a one-bedroom in the Reno area at $1,631, well above the average rate of $1,457 in Las Vegas.

Scattini said this is the biggest test that Washoe County will face in the years to come, is making sure affordable housing keeps up with the growing housing demand in the area.

“I think the big thing a lot of people don’t know is that 87 percent of Nevada is owned by the government,” she said, referring to federal land managed by the Bureau of Land Management. “And it’s pretty simple they need to release more of that land so we can continue to build because currently in Northern Nevada we don’t have the infrastructure.”

2023 was the slowest year for home sales Washoe County has seen since 2018, but cash buyers have clearly propped up the local housing market. Bonnenfant said as long as the narrative remains the same, the real estate story will continue in lockstep.

“Recent census data reports that California continues to bleed above income households,” he said. “Thus, the demand side continues to show healthy signs for our region.”

Contact Patrick Blennerhassett at [email protected].

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